-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LbjJCkLziwX4MIa9BGNForOMXYUtemREXxgg3knPSGYfntp+7CZPrsYx2ig3zWQK rVm5edY+z7/5Lgp31/UX7Q== 0000950157-98-000462.txt : 19981126 0000950157-98-000462.hdr.sgml : 19981126 ACCESSION NUMBER: 0000950157-98-000462 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19981123 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNUM CORP CENTRAL INDEX KEY: 0000795581 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 010405657 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09254 FILM NUMBER: 98759879 BUSINESS ADDRESS: STREET 1: 2211 CONGRESS ST P612 CITY: PORTLAND STATE: ME ZIP: 04122 BUSINESS PHONE: 2077704363 MAIL ADDRESS: STREET 1: 2211 CONGRESS STREET CITY: PORTLAND STATE: ME ZIP: 04122 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 Date of Report (Date of earliest event reported): November 22, 1998 UNUM Corporation (Exact name of registrant as specified in its charter) Delaware 1-9254 01-0405657 (State or Other (Commission File (IRS Employer Jurisdiction Number) Identification Number) of Incorporation) 2211 Congress Street, Portland, Maine 04122 (Address of principal executive offices) (Zip Code) (207) 770-2211 (Registrant's telephone number, including area code) None (Former Name or Former Address, if Changed Since Last Report) 2 Item 5. Other Events. On November 22, 1998, UNUM Corporation ("UNUM") entered into an Agreement and Plan of Merger dated as of November 22, 1998 (the "Merger Agreement"), between UNUM and Provident Companies, Inc. ("Provident"), pursuant to which UNUM and Provident will merge (the "Merger") under the name UNUMProvident Corporation ("UNUMProvident"). Pursuant to the Merger and the other transactions contemplated by the Merger Agreement, each share of Provident common stock will be converted into 0.730 of a share of UNUMProvident common stock and each share of UNUM common stock will be converted into one share of UNUMProvident common stock. In connection with the Merger Agreement, UNUM granted Provident an option to purchase 27,563,644 shares of the common stock of UNUM (19.9% of UNUM's issued and outstanding common stock) pursuant to a Stock Option Agreement (the "UNUM Stock Option Agreement") dated as of November 22, 1998, between UNUM and Provident. The option becomes exercisable upon the occurrence of certain events, none of which has occurred at the time of this filing. Also in connection with the Merger Agreement, Provident granted UNUM an option to purchase 26,945,874 shares of the common stock of Provident (19.9% of Provident's issued and outstanding common stock) pursuant to a Stock Option Agreement (the "Provident Stock Option Agreement") dated as of November 22, 1998, between Provident and UNUM. The option becomes exercisable upon the occurrence of certain events, none of which has occurred at the time of this filing. Also in connection with the Merger Agreement, Stockholders who collectively have beneficial ownership of approximately 26% of the outstanding common stock of Provident have agreed, pursuant to a Stockholders Agreement (the "Stockholders Agreement"), dated as of November 22, 1998, to vote in favor of the Merger and related transactions at any stockholders meeting in which such matters are considered. The Merger is subject to certain regulatory approvals as well as to the adoption of the Merger Agreement by the stockholders of UNUM and the stockholders of Provident, and the approval of the issuance of UNUMProvident common stock pursuant to the Merger Agreement by the holders of Provident common stock. Attached and incorporated herein by reference in their entirety as Exhibits 2.1, 10.1, 10.2, 10.3 and 99.1, respectively, are copies of (1) the Merger Agreement, (2) the Provident Stock Option Agreement, (3) the UNUM Stock Option Agreement, (4) the Stockholders Agreement and (5) a press release of UNUM and Provident announcing the signing of a definitive agreement to merge the two companies. Item 7(c). Exhibits. 2.1 Agreement and Plan of Merger dated as of November 22, 1998, between Provident Companies, Inc., and UNUM Corporation. 10.1 Stock Option Agreement dated as of November 22, 1998, between Provident Companies, Inc., and UNUM Corporation, as Grantee. 10.2 Stock Option Agreement dated as of November 22, 1998, between UNUM Corporation and Provident Companies, Inc., as Grantee. 10.3 Stockholders Agreement dated as of November 22, 1998, between UNUM Corporation and certain stockholders of Provident Companies, Inc. 99.1 Press release dated November 23, 1998, announcing the signing of an agreement to merge UNUM Corporation and Provident Companies, Inc. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. UNUM Corporation ------------------------------ (Registrant) Date: November 25, 1998 By: /s/ Robert E. Broatch ------------------------- ------------------------------ (Signature) Name: Robert E. Broatch Title: Senior Vice President & Chief Financial Officer 4 EXHIBIT INDEX Exhibit Description 2.1 Agreement and Plan of Merger dated as of November 22, 1998, between Provident Companies, Inc., and UNUM Corporation. 10.1 Stock Option Agreement dated as of November 22, 1998, between Provident Companies, Inc., and UNUM Corporation, as Grantee. 10.2 Stock Option Agreement dated as of November 22, 1998, between UNUM Corporation and Provident Companies, Inc., as Grantee. 10.3 Stockholders Agreement dated as of November 22, 1998, between UNUM Corporation and certain stockholders of Provident Companies, Inc. 99.1 Press release dated November 23, 1998, announcing the signing of an agreement to merge UNUM Corporation and Provident Companies, Inc. EX-2.1 2 STOCK OPTION AGREEMENT EXECUTION COPY STOCK OPTION AGREEMENT dated as of November 22, 1998 (the "Agreement"), by and between PROVIDENT COMPANIES, INC., a Delaware corporation ("Issuer"), and UNUM CORPORATION, a Delaware corporation ("Grantee"). RECITALS A. Issuer and Grantee have entered into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"; defined terms used but not defined herein have the meanings set forth in the Merger Agreement), providing for, among other things, the merger of Grantee with and into Issuer with Issuer as the surviving corporation in the Merger; B. As a condition and inducement to Grantee's willingness to enter into the Merger Agreement, the Stockholders Agreement and the UNUM Stock Option Agreement, Grantee has requested that Issuer agree, and Issuer has agreed, to grant Grantee the Option (as defined below); and C. As a condition and inducement to Issuer's willingness to enter into the Merger Agreement and this Agreement, Issuer has requested that Grantee agree, and Grantee has agreed, to grant Issuer an option to purchase shares of Grantee's common stock on substantially the same terms as the Option; NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, Issuer and Grantee agree as follows: 1. Grant of Option. Subject to the terms and conditions set forth herein, Issuer hereby grants to Grantee an irrevocable option (the "Option", which term shall, as applicable, be deemed to refer to an option with respect to Issuer Preferred Stock (as defined in Section 2(b)) to purchase up to 26,945,874 (as adjusted as set forth herein) shares (the "Option Shares", which term shall, as applicable, be deemed to refer to Issuer Preferred Option Shares (as defined in Section 2(b)), of Common Stock, par value $1.00 per share ("Issuer Common Stock"), of Issuer at a purchase price of $35.131 (as adjusted as set forth herein) per Option Share (the "Purchase Price"). 2. Exercise of Option. (a) Grantee may exercise the Option, with respect to any or all of the Option Shares at any time, subject to the provisions of Section 2(c), after the occurrence of any event as a result of which the Grantee is entitled to receive the Termination Fee pursuant to Section 5.09(b) of the Merger Agreement (a "Purchase Event"); provided, however, that (i) except as provided in the last sentence of this Section 2(a), the Option will terminate and be of no further force and effect upon the earliest to occur of (A) the Effective Time, (B) 18 months after the first occurrence of a Purchase Event, and (C) termination of the Merger Agreement in accordance with its terms prior to the occurrence of a Purchase Event, unless, in the case of this clause (C), the Grantee has the right to receive a Termination Fee following such termination upon the occurrence of certain events, in which case the Option will not terminate until the later of (x) six months following the time such Termination Fee becomes payable and (y) the expiration of the period in which the Grantee has such right to receive a Termination Fee, and (ii) any purchase of Option Shares upon exercise of the Option will be subject to compliance with the HSR Act and the obtaining or making of any consents, approvals, orders, notifications, filings, expiration of applicable waiting periods or authorizations, the failure of which to have obtained or made would have the effect of making the issuance of Option Shares to Grantee illegal (the "Regulatory Approvals"). Notwithstanding the termination of the Option, Grantee will be entitled to purchase the Option Shares if it has exercised the Option in accordance with the terms hereof prior to the termination of the Option and the termination of the Option will not affect any rights hereunder which by their terms do not terminate or expire prior to or as of such termination. (b) In the event that Grantee is entitled to and wishes to exercise the Option, it will send to Issuer a written notice (an "Exercise Notice"; the date of which being herein referred to as the "Notice Date") to that effect which Exercise Notice also specifies the number of Option Shares, if any, Grantee wishes to purchase pursuant to this Section 2(b), the number of Option Shares, if any, with respect to which Grantee wishes to exercise its Cash-Out Right (as defined herein) pursuant to Section 6(c), the denominations of the certificate or certificates evidencing the Option Shares which Grantee wishes to purchase pursuant to this Section 2(b) and a date (an "Option Closing Date"), subject to the following sentence, not earlier than three business days nor later than 20 business days from the Notice Date for the closing of such purchase (an "Option Closing"); provided, however, that in the event a sufficient number of shares of Issuer Common Stock are not authorized to permit the issuance by the Issuer of the number of Option Shares subject to such Exercise Notice, the Issuer shall use its best efforts to cause such number of shares of Issuer Common Stock to become authorized for issuance prior to the Option Closing Date, or, in lieu thereof, a number of shares of preferred stock, par value $1.00 per share, authorized and designated by the Issuer in accordance with the DGCL ("Issuer Preferred Stock"), which shares (or units thereof) of preferred stock shall be equal (in number and voting power) to the number of Option Shares issuable pursuant to such Exercise Notice and otherwise have terms that make such preferred stock substantially similar to Issuer Common Stock (the "Issuer Preferred Option Shares"). Any Option Closing will be at an agreed location and time in New York, New York on the applicable Option Closing Date or at such later date as may be necessary so as to comply with the first sentence of Section 2(a). (c) Notwithstanding anything to the contrary contained herein, any exercise of the Option and purchase of Option Shares shall be subject to compliance with applicable laws and regulations, which may prohibit the purchase of all the Option Shares specified in the Exercise Notice without first obtaining or making certain Regulatory Approvals. In such event, if the Option is otherwise exercisable and Grantee wishes to exercise the Option, the Option may be exercised in accordance with Section 2(b) and Grantee shall acquire the maximum number of Option Shares specified in the Exercise Notice that Grantee is then permitted to acquire under the applicable laws and regulations, and if Grantee thereafter obtains the Regulatory Approvals to acquire the remaining balance of the Option Shares specified in the Exercise Notice, then Grantee shall be entitled to acquire such remaining balance. Issuer agrees to use its reasonable efforts to assist Grantee in seeking the Regulatory Approvals. In the event (i) Grantee receives official notice that a Regulatory Approval required for the purchase of any Option Shares will not be issued or granted or (ii) such Regulatory Approval has not been issued or granted within six months of the date of the Exercise Notice, Grantee shall have the right to exercise its Cash-Out Right pursuant to Section 6(c) with respect to the Option Shares for which such Regulatory Approval will not be issued or granted or has not been issued or granted. 3. Payment and Delivery of Certificates. (a) At any Option Closing, Grantee will pay to Issuer in immediately available funds by wire transfer to a bank account designated in writing by Issuer an amount equal to the Purchase Price multiplied by the number of Option Shares to be purchased at such Option Closing. (b) At any Option Closing, simultaneously with the delivery of immediately available funds as provided in Section 3(a), Issuer will deliver to Grantee a certificate or certificates representing the Option Shares to be purchased at such Option Closing, which Option Shares will be free and clear of all liens, claims, charges and encumbrances of any kind whatsoever. (c) Certificates for the Option Shares delivered at an Option Closing will have typed or printed thereon a restrictive legend which will read substantially as follows: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT, DATED AS OF NOVEMBER 22, 1998, A COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF PROVIDENT COMPANIES, INC. AT ITS PRINCIPAL EXECUTIVE OFFICES." It is understood and agreed that (i) the reference to restrictions arising under the Securities Act in the above legend will be removed by delivery of substitute certificate(s) without such reference if such Option Shares have been registered pursuant to the Securities Act, such Option Shares have been sold in reliance on and in accor dance with Rule 144 under the Securities Act or Grantee has delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel in form and substance reasonably satisfactory to Issuer and its counsel, to the effect that such legend is not required for purposes of the Securities Act and (ii) the reference to restrictions pursuant to this Agreement in the above legend will be removed by delivery of substitute certificate(s) without such reference if the Option Shares evidenced by certificate(s) containing such reference have been sold or transferred in compliance with the provisions of this Agreement under circumstances that do not require the retention of such reference. 4. Representations and Warranties of Issuer. Issuer hereby represents and warrants to Grantee as follows: Authorized Stock. Issuer has taken all necessary corporate and other action to authorize and reserve and, subject to the expiration or termination of any required waiting period under the HSR Act, to permit it to issue, and, at all times from the date hereof until the obligation to deliver Option Shares upon the exercise of the Option terminates, shall have reserved for issuance, upon exercise of the Option, shares of Issuer Common Stock or, to the extent of any deficiency in the amount of authorized Issuer Common Stock, Issuer Preferred Option Shares necessary for Grantee to exercise the Option, and Issuer will take all necessary corporate action to authorize and reserve for issuance all additional shares of Issuer Common Stock and/or Issuer Preferred Option Shares or other securities which may be issued pursuant to Section 6 upon exercise of the Option. The shares of Issuer Common Stock and/or Issuer Preferred Option Shares to be issued upon due exercise of the Option, including all additional shares of Issuer Common Stock and/or Issuer Preferred Option Shares or other securities which may be issuable upon exercise of the Option or any other securities which may be issued pursuant to Section 6, upon issuance pursuant hereto, will be duly and validly issued, fully paid and nonassessable, and will be delivered free and clear of all liens, claims, charges and encumbrances of any kind or nature whatsoever, including without limitation any preemptive rights of any stockholder of Issuer. 5. Representations and Warranties of Grantee. Grantee hereby represents and warrants to Issuer that: Purchase Not for Distribution. Any Option Shares or other securities acquired by Grantee upon exercise of the Option will not be transferred or otherwise disposed of except in a transaction registered, or exempt from registration, under the Securities Act. 6. Adjustment upon Changes in Capitalization, Etc. (a) In the event of any change in the Issuer Common Stock by reason of a stock dividend, split-up, reverse stock split, merger, recapitalization, combination, exchange of shares, or similar transaction, the type and number of shares or securities subject to the Option, and the Purchase Price thereof, will be adjusted appropriately, and proper provision will be made in the agreements governing such transaction, so that Grantee will receive upon exercise of the Option the number and class of shares or other securities or property that Grantee would have received in respect of Issuer Common Stock if the Option had been exercised immediately prior to such event or the record date therefor, as applicable. Subject to Section 1, and without limiting the parties' relative rights and obligations under the Merger Agreement, if any additional shares of Issuer Common Stock are issued after the date of this Agreement (other than pursuant to an event described in the first sentence of this Section 6(a)), the number of shares of Issuer Common Stock subject to the Option will be adjusted so that, after such issuance, it equates 19.9% of the number of shares of Issuer Common Stock then issued and outstanding, without giving effect to any shares subject to or issued pursuant to the Option. (b) Without limiting the parties' relative rights and obligations under the Merger Agreement, in the event that Issuer enters into an agreement (i) to consolidate with or merge into any person, other than Grantee or one of its subsidiaries, and Issuer will not be the continuing or surviving corporation in such consolidation or merger, (ii) to permit any person, other than Grantee or one of its subsidiaries, to merge into Issuer and Issuer will be the continuing or surviving corporation, but in connection with such merger, the shares of Issuer Common Stock outstanding immediately prior to the consummation of such merger will be changed into or exchanged for stock or other securities of Issuer or any other person or cash or any other property, or the shares of Issuer Common Stock outstanding immediately prior to the consummation of such merger will, after such merger, represent less than 50% of the outstanding voting securities of the merged company, or (iii) to sell or otherwise transfer all or substantially all of its assets to any person, other than Grantee or one of its subsidiaries, then, and in each such case, the agreement governing such transaction will make proper provision so that the Option will, upon the consummation of any such transaction and upon the terms and conditions set forth herein, be converted into, or exchanged for, an option with identical terms appropriately adjusted to acquire the number and class of shares or other securities or property that Grantee would have received in respect of Issuer Common Stock if the Option had been exercised immediately prior to such consolidation, merger, sale, or transfer, or the record date therefor, as applicable and make any other necessary adjustments. (c) Notwithstanding that the Issuer may at any such time not have sufficient authorized shares of Issuer Common Stock or may not have authorized and designated the Issuer Preferred Option Shares in accordance with the DGCL, in each case issuable pursuant to exercise of the Option, if, at any time during the period commencing on a Purchase Event and ending on the termination of the Option in accordance with Section 2, Grantee sends to Issuer an Exercise Notice indicating Grantee's election to exercise its right (the "Cash-Out Right") pursuant to this Section 6(c), then Issuer shall pay to Grantee, on the Option Closing Date, in exchange for the cancellation of the Option with respect to such number of Option Shares as Grantee specifies in the Exercise Notice, an amount in cash equal to such number of Option Shares multiplied by the difference between (i) the average closing price, for the 10 NYSE trading days commencing on the 12th NYSE trading day immediately preceding the Notice Date, per share of Issuer Common Stock as reported on the NYSE Composite Transaction Tape (or, if not listed on the NYSE, as reported on any other national securities exchange or national securities quotation system on which the Issuer Common Stock is listed or quoted, as reported in The Wall Street Journal (Northeast edition), or, if not reported thereby, any other authoritative source) (the "Closing Price") and (ii) the Purchase Price. Notwithstanding the termination of the Option, Grantee will be entitled to exercise its rights under this Section 6(c) if it has exercised such rights in accordance with the terms hereof prior to the termination of the Option. 7. Registration Rights. Issuer will, if requested by Grantee at any time and from time to time within three years of the exercise of the Option, as expeditiously as possible prepare and file up to three registration statements under the Securities Act if such registration is necessary in order to permit the sale or other disposition of any or all shares of securities that have been acquired by or are issuable to Grantee upon exercise of the Option in accordance with the intended method of sale or other disposition stated by Grantee, including a "shelf" registration statement under Rule 415 under the Securities Act or any successor provision, and Issuer will use its best efforts to qualify such shares or other securities under any applicable state securities laws. Grantee agrees to use reasonable efforts to cause, and to cause any underwriters of any sale or other disposition to cause, any sale or other disposition pursuant to such registration statement to be effected on a widely distributed basis so that upon consummation thereof no purchaser or transferee will own beneficially more than 4.9% of the then-outstanding voting power of Issuer. Issuer will use reasonable efforts to cause each such registration statement to become effective, to obtain all consents or waivers of other parties which are required therefor, and to keep such registration statement effective for such period not in excess of 180 calendar days from the day such registration statement first becomes effective as may be reasonably necessary to effect such sale or other disposition. The obligations of Issuer hereunder to file a registration statement and to maintain its effectiveness may be suspended for up to 60 calendar days in the aggregate if the Board of Directors of Issuer shall have determined that the filing of such registration statement or the maintenance of its effectiveness would require premature disclosure of material nonpublic information that would materially and adversely affect Issuer or otherwise interfere with or adversely affect any pending or proposed offering of securities of Issuer or any other material transaction involving Issuer. Any registration statement prepared and filed under this Section 7, and any sale covered thereby, will be at Issuer's expense except for underwriting discounts or commissions, brokers' fees and the fees and disbursements of Grantee's counsel related thereto. Grantee will provide all information reasonably requested by Issuer for inclusion in any registration statement to be filed hereunder. If, during the time periods referred to in the first sentence of this Section 7, Issuer effects a registration under the Securities Act of Issuer Common Stock for its own account or for any other stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor form), it will allow Grantee the right to participate in such registration, and such participation will not affect the obligation of Issuer to effect demand registration statements for Grantee under this Section 7; provided that, if the managing underwriters of such offering advise Issuer in writing that in their opinion the number of shares of Issuer Common Stock requested to be included in such registration exceeds the number which can be sold in such offering, Issuer will include the shares requested to be included therein by Grantee pro rata with the shares intended to be included therein by Issuer. In connection with any registration pursuant to this Section 7, Issuer and Grantee will provide each other and any underwriter of the offering with customary representations, warranties, covenants, indemnification, and contribution in connection with such registration. 8. Limitation on Profit. (a) Notwithstanding any other provision of this Agreement, in no event shall the Grantee's Total Profit (as defined below) plus any Termination Fee paid to Grantee pursuant to Section 5.09(b) of the Merger Agreement exceed in the aggregate $250 million and, if the total amount that otherwise would be received by Grantee would exceed such amount, the Grantee, at its sole election, shall either (i) reduce the number of shares of Issuer Common Stock or Issuer Preferred Stock, as the case may be, subject to the Option, (ii) deliver to the Issuer for cancellation Option Shares previously purchased by Grantee against the refund of the Purchase Price therefore, (iii) pay cash to the Issuer or (iv) any combination thereof, so that Grantee's actually realized Total Profit, when aggregated with such Termination Fee so paid to Grantee, shall not exceed $250 million after taking into account the foregoing actions. (b) Notwithstanding any other provision of this Agreement, the Option may not be exercised for a number of Option Shares as would, as of the date of exercise, result in a Notional Total Profit (as defined below) which, together with any Termination Fee theretofore paid to Grantee, would exceed $250 million; provided, that nothing in this sentence shall restrict any exercise of the Option permitted hereby on any subsequent date. (c) As used herein, the term "Total Profit" shall mean the aggregate amount (before taxes) of the following: (i) the amount received by Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant to Section 6(c), (ii)(x) the net cash amounts or the fair market value of any property received by Grantee pursuant to the sale of Option Shares (or any other securities into which such Option Shares are converted or exchanged) to any unaffiliated party, but in no case less than the fair market value of such Option Shares, less (y) the Grantee's purchase price of such Option Shares, and (iii) the net cash amounts received by Grantee on the transfer (in accordance with Section 12(g) hereof) of the Option (or any portion thereof) to any unaffiliated party. (d) As used herein, the term "Notional Total Profit" with respect to any number of Option Shares as to which Grantee may propose to exercise the Option shall be the Total Profit determined as of the date of such proposal assuming for such purpose that the Option were exercised on such date for such number of Option Shares and assuming that such Option Shares (including any units of Issuer Preferred Stock intended to equate to Issuer Common Stock), together with all other Option Shares (including any units of Issuer Preferred Stock intended to equate to Issuer Common Stock) held by Grantee and its affiliates as of such date, were sold for cash at the closing market price on the NYSE for the Issuer Common Stock as of the close of business on the preceding trading day (less customary brokerage commissions.) 9. Transfers. The Option Shares may not be sold, assigned, transferred, or otherwise disposed of except (i) in an underwritten public offering as provided in Section 7 or (ii) to any purchaser or transferee who would not, to the knowledge of the Grantee after reasonable inquiry, immediately following such sale, assignment, transfer or disposal beneficially own more than 4.9% of the then-outstanding voting power of the Issuer; provided, however, that Grantee shall be permitted to sell any Option Shares if such sale is made pursuant to a tender or exchange offer that has been approved or recommended by a majority of the members of the Board of Directors of Issuer (which majority shall include a majority of directors who were directors as of the date hereof). 10. Listing. If Issuer Common Stock or any other securities to be acquired upon exercise of the Option are then listed on the NYSE (or any other national securities exchange or national securities quotation system), Issuer, upon the request of Grantee, will promptly file an application to list the shares of Issuer Common Stock or other securities to be acquired upon exercise of the Option on the NYSE (and any such other national securities exchange or national securities quotation system) and will use reasonable efforts to obtain approval of such listing as promptly as practicable. 11. Loss or Mutilation. Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like tenor and date. Any such new Agreement executed and delivered will constitute an additional contractual obligation on the part of Issuer, whether or not the Agreement so lost, stolen, destroyed, or mutilated shall at any time be enforceable by anyone. 12. Miscellaneous. (a) Expenses. Except as otherwise provided in the Merger Agreement, each of the parties hereto will bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including fees and expenses of its own financial consultants, investment bankers, accountants, and counsel. (b) Amendment. This Agreement may not be amended, except by an instrument in writing signed on behalf of each of the parties. (c) Extension; Waiver. Any agreement on the part of a party to waive any provision of this Agreement, or to extend the time for performance, will be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights. (d) Entire Agreement; No Third-Party Beneficiaries. This Agreement, the UNUM Stock Option Agreement, the Merger Agreement (including the documents and instruments attached thereto as exhibits or schedules or delivered in connection therewith), the Stockholders Agreement, the Confidentiality Agreement and the Letter Agreement (i) constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement, and (ii) except as provided in Section 8.06 of the Merger Agreement, are not intended to confer upon any person other than the parties any rights or remedies. (e) Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the laws that might otherwise govern under applicable principles of conflict of laws thereof. (f) Notices. All notices, requests, claims, demands, and other communications under this Agreement must be in writing and will be deemed given if delivered personally, telecopied (which is confirmed), or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to Issuer to: Provident Companies, Inc. 1 Fountain Square Chattanooga, Tennessee 37402 Telecopy No.: (423) 755-5036 Attention: F. Dean Copeland with a copy to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: H. Rodgin Cohen Fax: (212) 558-3588; and If to Grantee to: UNUM Corporation 2211 Congress Street Portland, Maine 04122 Telecopy No.: (207) 770-4377 Attention: Kevin J. Tierney with copies to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Attention: Robert A. Kindler Fax: (212) 474-3700 (g) Assignment. Neither this Agreement, the Option nor any of the rights, interests, or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by Issuer or Grantee without the prior written consent of the other. Any assignment or delegation in violation of the preceding sentence will be void. Subject to the first and second sentences of this Section 12(g), this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (h) Further Assurances. In the event of any exercise of the Option by Grantee, Issuer and Grantee will execute and deliver all other documents and instruments and take all other actions that may be reasonably necessary in order to consummate the transactions provided for by such exercise. (i) Enforcement. The parties agree that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Federal court located in the State of Delaware or in Delaware state court, the foregoing being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto (i) consents to submit itself to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a Federal court sitting in the State of Delaware or a Delaware state court. 13. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Amendment so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the day and year first written above. PROVIDENT COMPANIES, INC., by /s/ James F. Orr III --------------------------------- Name: James F. Orr III Title: Chairman, President and Chief Executive Officer UNUM CORPORATION, by /s/ J. Harold Chandler -------------------------------- Name: J. Harold Chandler Title: Chairman and Chief Executive Officer EX-10.1 3 STOCK OPTION AGREEMENT EXECUTION COPY STOCK OPTION AGREEMENT dated as of November 22, 1998 (the "Agreement"), by and between PROVIDENT COMPANIES, INC., a Delaware corporation ("Issuer"), and UNUM CORPORATION, a Delaware corporation ("Grantee"). RECITALS A. Issuer and Grantee have entered into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"; defined terms used but not defined herein have the meanings set forth in the Merger Agreement), providing for, among other things, the merger of Grantee with and into Issuer with Issuer as the surviving corporation in the Merger; B. As a condition and inducement to Grantee's willingness to enter into the Merger Agreement, the Stockholders Agreement and the UNUM Stock Option Agreement, Grantee has requested that Issuer agree, and Issuer has agreed, to grant Grantee the Option (as defined below); and C. As a condition and inducement to Issuer's willingness to enter into the Merger Agreement and this Agreement, Issuer has requested that Grantee agree, and Grantee has agreed, to grant Issuer an option to purchase shares of Grantee's common stock on substantially the same terms as the Option; NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, Issuer and Grantee agree as follows: 1. Grant of Option. Subject to the terms and conditions set forth herein, Issuer hereby grants to Grantee an irrevocable option (the "Option", which term shall, as applicable, be deemed to refer to an option with respect to Issuer Preferred Stock (as defined in Section 2(b)) to purchase up to 26,945,874 (as adjusted as set forth herein) shares (the "Option Shares", which term shall, as applicable, be deemed to refer to Issuer Preferred Option Shares (as defined in Section 2(b)), of Common Stock, par value $1.00 per share ("Issuer Common Stock"), of Issuer at a purchase price of $35.131 (as adjusted as set forth herein) per Option Share (the "Purchase Price"). 2. Exercise of Option. (a) Grantee may exercise the Option, with respect to any or all of the Option Shares at any time, subject to the provisions of Section 2(c), after the occurrence of any event as a result of which the Grantee is entitled to receive the Termination Fee pursuant to Section 5.09(b) of the Merger Agreement (a "Purchase Event"); provided, however, that (i) except as provided in the last sentence of this Section 2(a), the Option will terminate and be of no further force and effect upon the earliest to occur of (A) the Effective Time, (B) 18 months after the first occurrence of a Purchase Event, and (C) termination of the Merger Agreement in accordance with its terms prior to the occurrence of a Purchase Event, unless, in the case of this clause (C), the Grantee has the right to receive a Termination Fee following such termination upon the occurrence of certain events, in which case the Option will not terminate until the later of (x) six months following the time such Termination Fee becomes payable and (y) the expiration of the period in which the Grantee has such right to receive a Termination Fee, and (ii) any purchase of Option Shares upon exercise of the Option will be subject to compliance with the HSR Act and the obtaining or making of any consents, approvals, orders, notifications, filings, expiration of applicable waiting periods or authorizations, the failure of which to have obtained or made would have the effect of making the issuance of Option Shares to Grantee illegal (the "Regulatory Approvals"). Notwithstanding the termination of the Option, Grantee will be entitled to purchase the Option Shares if it has exercised the Option in accordance with the terms hereof prior to the termination of the Option and the termination of the Option will not affect any rights hereunder which by their terms do not terminate or expire prior to or as of such termination. (b) In the event that Grantee is entitled to and wishes to exercise the Option, it will send to Issuer a written notice (an "Exercise Notice"; the date of which being herein referred to as the "Notice Date") to that effect which Exercise Notice also specifies the number of Option Shares, if any, Grantee wishes to purchase pursuant to this Section 2(b), the number of Option Shares, if any, with respect to which Grantee wishes to exercise its Cash-Out Right (as defined herein) pursuant to Section 6(c), the denominations of the certificate or certificates evidencing the Option Shares which Grantee wishes to purchase pursuant to this Section 2(b) and a date (an "Option Closing Date"), subject to the following sentence, not earlier than three business days nor later than 20 business days from the Notice Date for the closing of such purchase (an "Option Closing"); provided, however, that in the event a sufficient number of shares of Issuer Common Stock are not authorized to permit the issuance by the Issuer of the number of Option Shares subject to such Exercise Notice, the Issuer shall use its best efforts to cause such number of shares of Issuer Common Stock to become authorized for issuance prior to the Option Closing Date, or, in lieu thereof, a number of shares of preferred stock, par value $1.00 per share, authorized and designated by the Issuer in accordance with the DGCL ("Issuer Preferred Stock"), which shares (or units thereof) of preferred stock shall be equal (in number and voting power) to the number of Option Shares issuable pursuant to such Exercise Notice and otherwise have terms that make such preferred stock substantially similar to Issuer Common Stock (the "Issuer Preferred Option Shares"). Any Option Closing will be at an agreed location and time in New York, New York on the applicable Option Closing Date or at such later date as may be necessary so as to comply with the first sentence of Section 2(a). (c) Notwithstanding anything to the contrary contained herein, any exercise of the Option and purchase of Option Shares shall be subject to compliance with applicable laws and regulations, which may prohibit the purchase of all the Option Shares specified in the Exercise Notice without first obtaining or making certain Regulatory Approvals. In such event, if the Option is otherwise exercisable and Grantee wishes to exercise the Option, the Option may be exercised in accordance with Section 2(b) and Grantee shall acquire the maximum number of Option Shares specified in the Exercise Notice that Grantee is then permitted to acquire under the applicable laws and regulations, and if Grantee thereafter obtains the Regulatory Approvals to acquire the remaining balance of the Option Shares specified in the Exercise Notice, then Grantee shall be entitled to acquire such remaining balance. Issuer agrees to use its reasonable efforts to assist Grantee in seeking the Regulatory Approvals. In the event (i) Grantee receives official notice that a Regulatory Approval required for the purchase of any Option Shares will not be issued or granted or (ii) such Regulatory Approval has not been issued or granted within six months of the date of the Exercise Notice, Grantee shall have the right to exercise its Cash-Out Right pursuant to Section 6(c) with respect to the Option Shares for which such Regulatory Approval will not be issued or granted or has not been issued or granted. 3. Payment and Delivery of Certificates. (a) At any Option Closing, Grantee will pay to Issuer in immediately available funds by wire transfer to a bank account designated in writing by Issuer an amount equal to the Purchase Price multiplied by the number of Option Shares to be purchased at such Option Closing. (b) At any Option Closing, simultaneously with the delivery of immediately available funds as provided in Section 3(a), Issuer will deliver to Grantee a certificate or certificates representing the Option Shares to be purchased at such Option Closing, which Option Shares will be free and clear of all liens, claims, charges and encumbrances of any kind whatsoever. (c) Certificates for the Option Shares delivered at an Option Closing will have typed or printed thereon a restrictive legend which will read substantially as follows: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT, DATED AS OF NOVEMBER 22, 1998, A COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF PROVIDENT COMPANIES, INC. AT ITS PRINCIPAL EXECUTIVE OFFICES." It is understood and agreed that (i) the reference to restrictions arising under the Securities Act in the above legend will be removed by delivery of substitute certificate(s) without such reference if such Option Shares have been registered pursuant to the Securities Act, such Option Shares have been sold in reliance on and in accor dance with Rule 144 under the Securities Act or Grantee has delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel in form and substance reasonably satisfactory to Issuer and its counsel, to the effect that such legend is not required for purposes of the Securities Act and (ii) the reference to restrictions pursuant to this Agreement in the above legend will be removed by delivery of substitute certificate(s) without such reference if the Option Shares evidenced by certificate(s) containing such reference have been sold or transferred in compliance with the provisions of this Agreement under circumstances that do not require the retention of such reference. 4. Representations and Warranties of Issuer. Issuer hereby represents and warrants to Grantee as follows: Authorized Stock. Issuer has taken all necessary corporate and other action to authorize and reserve and, subject to the expiration or termination of any required waiting period under the HSR Act, to permit it to issue, and, at all times from the date hereof until the obligation to deliver Option Shares upon the exercise of the Option terminates, shall have reserved for issuance, upon exercise of the Option, shares of Issuer Common Stock or, to the extent of any deficiency in the amount of authorized Issuer Common Stock, Issuer Preferred Option Shares necessary for Grantee to exercise the Option, and Issuer will take all necessary corporate action to authorize and reserve for issuance all additional shares of Issuer Common Stock and/or Issuer Preferred Option Shares or other securities which may be issued pursuant to Section 6 upon exercise of the Option. The shares of Issuer Common Stock and/or Issuer Preferred Option Shares to be issued upon due exercise of the Option, including all additional shares of Issuer Common Stock and/or Issuer Preferred Option Shares or other securities which may be issuable upon exercise of the Option or any other securities which may be issued pursuant to Section 6, upon issuance pursuant hereto, will be duly and validly issued, fully paid and nonassessable, and will be delivered free and clear of all liens, claims, charges and encumbrances of any kind or nature whatsoever, including without limitation any preemptive rights of any stockholder of Issuer. 5. Representations and Warranties of Grantee. Grantee hereby represents and warrants to Issuer that: Purchase Not for Distribution. Any Option Shares or other securities acquired by Grantee upon exercise of the Option will not be transferred or otherwise disposed of except in a transaction registered, or exempt from registration, under the Securities Act. 6. Adjustment upon Changes in Capitalization, Etc. (a) In the event of any change in the Issuer Common Stock by reason of a stock dividend, split-up, reverse stock split, merger, recapitalization, combination, exchange of shares, or similar transaction, the type and number of shares or securities subject to the Option, and the Purchase Price thereof, will be adjusted appropriately, and proper provision will be made in the agreements governing such transaction, so that Grantee will receive upon exercise of the Option the number and class of shares or other securities or property that Grantee would have received in respect of Issuer Common Stock if the Option had been exercised immediately prior to such event or the record date therefor, as applicable. Subject to Section 1, and without limiting the parties' relative rights and obligations under the Merger Agreement, if any additional shares of Issuer Common Stock are issued after the date of this Agreement (other than pursuant to an event described in the first sentence of this Section 6(a)), the number of shares of Issuer Common Stock subject to the Option will be adjusted so that, after such issuance, it equates 19.9% of the number of shares of Issuer Common Stock then issued and outstanding, without giving effect to any shares subject to or issued pursuant to the Option. (b) Without limiting the parties' relative rights and obligations under the Merger Agreement, in the event that Issuer enters into an agreement (i) to consolidate with or merge into any person, other than Grantee or one of its subsidiaries, and Issuer will not be the continuing or surviving corporation in such consolidation or merger, (ii) to permit any person, other than Grantee or one of its subsidiaries, to merge into Issuer and Issuer will be the continuing or surviving corporation, but in connection with such merger, the shares of Issuer Common Stock outstanding immediately prior to the consummation of such merger will be changed into or exchanged for stock or other securities of Issuer or any other person or cash or any other property, or the shares of Issuer Common Stock outstanding immediately prior to the consummation of such merger will, after such merger, represent less than 50% of the outstanding voting securities of the merged company, or (iii) to sell or otherwise transfer all or substantially all of its assets to any person, other than Grantee or one of its subsidiaries, then, and in each such case, the agreement governing such transaction will make proper provision so that the Option will, upon the consummation of any such transaction and upon the terms and conditions set forth herein, be converted into, or exchanged for, an option with identical terms appropriately adjusted to acquire the number and class of shares or other securities or property that Grantee would have received in respect of Issuer Common Stock if the Option had been exercised immediately prior to such consolidation, merger, sale, or transfer, or the record date therefor, as applicable and make any other necessary adjustments. (c) Notwithstanding that the Issuer may at any such time not have sufficient authorized shares of Issuer Common Stock or may not have authorized and designated the Issuer Preferred Option Shares in accordance with the DGCL, in each case issuable pursuant to exercise of the Option, if, at any time during the period commencing on a Purchase Event and ending on the termination of the Option in accordance with Section 2, Grantee sends to Issuer an Exercise Notice indicating Grantee's election to exercise its right (the "Cash-Out Right") pursuant to this Section 6(c), then Issuer shall pay to Grantee, on the Option Closing Date, in exchange for the cancellation of the Option with respect to such number of Option Shares as Grantee specifies in the Exercise Notice, an amount in cash equal to such number of Option Shares multiplied by the difference between (i) the average closing price, for the 10 NYSE trading days commencing on the 12th NYSE trading day immediately preceding the Notice Date, per share of Issuer Common Stock as reported on the NYSE Composite Transaction Tape (or, if not listed on the NYSE, as reported on any other national securities exchange or national securities quotation system on which the Issuer Common Stock is listed or quoted, as reported in The Wall Street Journal (Northeast edition), or, if not reported thereby, any other authoritative source) (the "Closing Price") and (ii) the Purchase Price. Notwithstanding the termination of the Option, Grantee will be entitled to exercise its rights under this Section 6(c) if it has exercised such rights in accordance with the terms hereof prior to the termination of the Option. 7. Registration Rights. Issuer will, if requested by Grantee at any time and from time to time within three years of the exercise of the Option, as expeditiously as possible prepare and file up to three registration statements under the Securities Act if such registration is necessary in order to permit the sale or other disposition of any or all shares of securities that have been acquired by or are issuable to Grantee upon exercise of the Option in accordance with the intended method of sale or other disposition stated by Grantee, including a "shelf" registration statement under Rule 415 under the Securities Act or any successor provision, and Issuer will use its best efforts to qualify such shares or other securities under any applicable state securities laws. Grantee agrees to use reasonable efforts to cause, and to cause any underwriters of any sale or other disposition to cause, any sale or other disposition pursuant to such registration statement to be effected on a widely distributed basis so that upon consummation thereof no purchaser or transferee will own beneficially more than 4.9% of the then-outstanding voting power of Issuer. Issuer will use reasonable efforts to cause each such registration statement to become effective, to obtain all consents or waivers of other parties which are required therefor, and to keep such registration statement effective for such period not in excess of 180 calendar days from the day such registration statement first becomes effective as may be reasonably necessary to effect such sale or other disposition. The obligations of Issuer hereunder to file a registration statement and to maintain its effectiveness may be suspended for up to 60 calendar days in the aggregate if the Board of Directors of Issuer shall have determined that the filing of such registration statement or the maintenance of its effectiveness would require premature disclosure of material nonpublic information that would materially and adversely affect Issuer or otherwise interfere with or adversely affect any pending or proposed offering of securities of Issuer or any other material transaction involving Issuer. Any registration statement prepared and filed under this Section 7, and any sale covered thereby, will be at Issuer's expense except for underwriting discounts or commissions, brokers' fees and the fees and disbursements of Grantee's counsel related thereto. Grantee will provide all information reasonably requested by Issuer for inclusion in any registration statement to be filed hereunder. If, during the time periods referred to in the first sentence of this Section 7, Issuer effects a registration under the Securities Act of Issuer Common Stock for its own account or for any other stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor form), it will allow Grantee the right to participate in such registration, and such participation will not affect the obligation of Issuer to effect demand registration statements for Grantee under this Section 7; provided that, if the managing underwriters of such offering advise Issuer in writing that in their opinion the number of shares of Issuer Common Stock requested to be included in such registration exceeds the number which can be sold in such offering, Issuer will include the shares requested to be included therein by Grantee pro rata with the shares intended to be included therein by Issuer. In connection with any registration pursuant to this Section 7, Issuer and Grantee will provide each other and any underwriter of the offering with customary representations, warranties, covenants, indemnification, and contribution in connection with such registration. 8. Limitation on Profit. (a) Notwithstanding any other provision of this Agreement, in no event shall the Grantee's Total Profit (as defined below) plus any Termination Fee paid to Grantee pursuant to Section 5.09(b) of the Merger Agreement exceed in the aggregate $250 million and, if the total amount that otherwise would be received by Grantee would exceed such amount, the Grantee, at its sole election, shall either (i) reduce the number of shares of Issuer Common Stock or Issuer Preferred Stock, as the case may be, subject to the Option, (ii) deliver to the Issuer for cancellation Option Shares previously purchased by Grantee against the refund of the Purchase Price therefore, (iii) pay cash to the Issuer or (iv) any combination thereof, so that Grantee's actually realized Total Profit, when aggregated with such Termination Fee so paid to Grantee, shall not exceed $250 million after taking into account the foregoing actions. (b) Notwithstanding any other provision of this Agreement, the Option may not be exercised for a number of Option Shares as would, as of the date of exercise, result in a Notional Total Profit (as defined below) which, together with any Termination Fee theretofore paid to Grantee, would exceed $250 million; provided, that nothing in this sentence shall restrict any exercise of the Option permitted hereby on any subsequent date. (c) As used herein, the term "Total Profit" shall mean the aggregate amount (before taxes) of the following: (i) the amount received by Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant to Section 6(c), (ii)(x) the net cash amounts or the fair market value of any property received by Grantee pursuant to the sale of Option Shares (or any other securities into which such Option Shares are converted or exchanged) to any unaffiliated party, but in no case less than the fair market value of such Option Shares, less (y) the Grantee's purchase price of such Option Shares, and (iii) the net cash amounts received by Grantee on the transfer (in accordance with Section 12(g) hereof) of the Option (or any portion thereof) to any unaffiliated party. (d) As used herein, the term "Notional Total Profit" with respect to any number of Option Shares as to which Grantee may propose to exercise the Option shall be the Total Profit determined as of the date of such proposal assuming for such purpose that the Option were exercised on such date for such number of Option Shares and assuming that such Option Shares (including any units of Issuer Preferred Stock intended to equate to Issuer Common Stock), together with all other Option Shares (including any units of Issuer Preferred Stock intended to equate to Issuer Common Stock) held by Grantee and its affiliates as of such date, were sold for cash at the closing market price on the NYSE for the Issuer Common Stock as of the close of business on the preceding trading day (less customary brokerage commissions.) 9. Transfers. The Option Shares may not be sold, assigned, transferred, or otherwise disposed of except (i) in an underwritten public offering as provided in Section 7 or (ii) to any purchaser or transferee who would not, to the knowledge of the Grantee after reasonable inquiry, immediately following such sale, assignment, transfer or disposal beneficially own more than 4.9% of the then-outstanding voting power of the Issuer; provided, however, that Grantee shall be permitted to sell any Option Shares if such sale is made pursuant to a tender or exchange offer that has been approved or recommended by a majority of the members of the Board of Directors of Issuer (which majority shall include a majority of directors who were directors as of the date hereof). 10. Listing. If Issuer Common Stock or any other securities to be acquired upon exercise of the Option are then listed on the NYSE (or any other national securities exchange or national securities quotation system), Issuer, upon the request of Grantee, will promptly file an application to list the shares of Issuer Common Stock or other securities to be acquired upon exercise of the Option on the NYSE (and any such other national securities exchange or national securities quotation system) and will use reasonable efforts to obtain approval of such listing as promptly as practicable. 11. Loss or Mutilation. Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like tenor and date. Any such new Agreement executed and delivered will constitute an additional contractual obligation on the part of Issuer, whether or not the Agreement so lost, stolen, destroyed, or mutilated shall at any time be enforceable by anyone. 12. Miscellaneous. (a) Expenses. Except as otherwise provided in the Merger Agreement, each of the parties hereto will bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including fees and expenses of its own financial consultants, investment bankers, accountants, and counsel. (b) Amendment. This Agreement may not be amended, except by an instrument in writing signed on behalf of each of the parties. (c) Extension; Waiver. Any agreement on the part of a party to waive any provision of this Agreement, or to extend the time for performance, will be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights. (d) Entire Agreement; No Third-Party Beneficiaries. This Agreement, the UNUM Stock Option Agreement, the Merger Agreement (including the documents and instruments attached thereto as exhibits or schedules or delivered in connection therewith), the Stockholders Agreement, the Confidentiality Agreement and the Letter Agreement (i) constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement, and (ii) except as provided in Section 8.06 of the Merger Agreement, are not intended to confer upon any person other than the parties any rights or remedies. (e) Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the laws that might otherwise govern under applicable principles of conflict of laws thereof. (f) Notices. All notices, requests, claims, demands, and other communications under this Agreement must be in writing and will be deemed given if delivered personally, telecopied (which is confirmed), or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to Issuer to: Provident Companies, Inc. 1 Fountain Square Chattanooga, Tennessee 37402 Telecopy No.: (423) 755-5036 Attention: F. Dean Copeland with a copy to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: H. Rodgin Cohen Fax: (212) 558-3588; and If to Grantee to: UNUM Corporation 2211 Congress Street Portland, Maine 04122 Telecopy No.: (207) 770-4377 Attention: Kevin J. Tierney with copies to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Attention: Robert A. Kindler Fax: (212) 474-3700 (g) Assignment. Neither this Agreement, the Option nor any of the rights, interests, or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by Issuer or Grantee without the prior written consent of the other. Any assignment or delegation in violation of the preceding sentence will be void. Subject to the first and second sentences of this Section 12(g), this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (h) Further Assurances. In the event of any exercise of the Option by Grantee, Issuer and Grantee will execute and deliver all other documents and instruments and take all other actions that may be reasonably necessary in order to consummate the transactions provided for by such exercise. (i) Enforcement. The parties agree that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Federal court located in the State of Delaware or in Delaware state court, the foregoing being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto (i) consents to submit itself to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a Federal court sitting in the State of Delaware or a Delaware state court. 13. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Amendment so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the day and year first written above. PROVIDENT COMPANIES, INC., by /s/ James F. Orr III --------------------------------- Name: James F. Orr III Title: Chairman, President and Chief Executive Officer UNUM CORPORATION, by /s/ J. Harold Chandler -------------------------------- Name: J. Harold Chandler Title: Chairman and Chief Executive Officer EX-10.2 4 STOCK OPTION AGREEMENT EXECUTION COPY STOCK OPTION AGREEMENT dated as of November 22, 1998 (the "Agreement"), by and between UNUM CORPORATION, a Delaware corporation ("Issuer"), and PROVIDENT COMPANIES, INC., a Delaware corporation ("Grantee"). RECITALS A. Issuer and Grantee have entered into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"; defined terms used but not defined herein have the meanings set forth in the Merger Agreement), providing for, among other things, the merger of Issuer with and into Grantee with Grantee as the surviving corporation in the Merger; B. As a condition and inducement to Grantee's willingness to enter into the Merger Agreement and the Provident Stock Option Agreement, Grantee has requested that Issuer agree, and Issuer has agreed, to grant Grantee the Option (as defined below); and C. As a condition and inducement to Issuer's willingness to enter into the Merger Agreement, the Stockholders Agreement and this Agreement, Issuer has requested that Grantee agree, and Grantee has agreed, to grant Issuer an option to purchase shares of Grantee's common stock on substantially the same terms as the Option; NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, Issuer and Grantee agree as follows: 1. Grant of Option. Subject to the terms and conditions set forth herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase up to 27,563,644 (as adjusted as set forth herein) shares (the "Option Shares") of Common Stock, par value $.10 per share ("Issuer Common Stock"), of Issuer at a purchase price of $50.657 (as adjusted as set forth herein) per Option Share (the "Purchase Price"). 2. Exercise of Option. (a) Grantee may exercise the Option, with respect to any or all of the Option Shares at any time, subject to the provisions of Section 2(c), after the occurrence of any event as a result of which the Grantee is entitled to receive the Termination Fee pursuant to Section 5.09(c) of the Merger Agreement (a "Purchase Event"); provided, however, that (i) except as provided in the last sentence of this Section 2(a), the Option will terminate and be of no further force and effect upon the earliest to occur of (A) the Effective Time, (B) 18 months after the first occurrence of a Purchase Event, and (C) termination of the Merger Agreement in accordance with its terms prior to the occurrence of a Purchase Event, unless, in the case of this clause (C), the Grantee has the right to receive a Termination Fee following such termination upon the occurrence of certain events, in which case the Option will not terminate until the later of (x) six months following the time such Termination Fee becomes payable and (y) the expiration of the period in which the Grantee has such right to receive a Termination Fee, and (ii) any purchase of Option Shares upon exercise of the Option will be subject to compliance with the HSR Act and the obtaining or making of any consents, approvals, orders, notifications, filings, expiration of applicable waiting periods or authorizations, the failure of which to have obtained or made would have the effect of making the issuance of Option Shares to Grantee illegal (the "Regulatory Approvals"). Notwithstanding the termination of the Option, Grantee will be entitled to purchase the Option Shares if it has exercised the Option in accordance with the terms hereof prior to the termination of the Option and the termination of the Option will not affect any rights hereunder which by their terms do not terminate or expire prior to or as of such termination. (b) In the event that Grantee is entitled to and wishes to exercise the Option, it will send to Issuer a written notice (an "Exercise Notice"; the date of which being herein referred to as the "Notice Date") to that effect which Exercise Notice also specifies the number of Option Shares, if any, Grantee wishes to purchase pursuant to this Section 2(b), the number of Option Shares, if any, with respect to which Grantee wishes to exercise its Cash-Out Right (as defined herein) pursuant to Section 6(c), the denominations of the certificate or certificates evidencing the Option Shares which Grantee wishes to purchase pursuant to this Section 2(b) and a date (an "Option Closing Date"), subject to the following sentence, not earlier than three business days nor later than 20 business days from the Notice Date for the closing of such purchase (an "Option Closing"). Any Option Closing will be at an agreed location and time in New York, New York on the applicable Option Closing Date or at such later date as may be necessary so as to comply with the first sentence of Section 2(a). (c) Notwithstanding anything to the contrary contained herein, any exercise of the Option and purchase of Option Shares shall be subject to compliance with applicable laws and regulations, which may prohibit the purchase of all the Option Shares specified in the Exercise Notice without first obtaining or making certain Regulatory Approvals. In such event, if the Option is otherwise exercisable and Grantee wishes to exercise the Option, the Option may be exercised in accordance with Section 2(b) and Grantee shall acquire the maximum number of Option Shares specified in the Exercise Notice that Grantee is then permitted to acquire under the applicable laws and regulations, and if Grantee thereafter obtains the Regulatory Approvals to acquire the remaining balance of the Option Shares specified in the Exercise Notice, then Grantee shall be entitled to acquire such remaining balance. Issuer agrees to use its reasonable efforts to assist Grantee in seeking the Regulatory Approvals. In the event (i) Grantee receives official notice that a Regulatory Approval required for the purchase of any Option Shares will not be issued or granted or (ii) such Regulatory Approval has not been issued or granted within six months of the date of the Exercise Notice, Grantee shall have the right to exercise its Cash-Out Right pursuant to Section 6(c) with respect to the Option Shares for which such Regulatory Approval will not be issued or granted or has not been issued or granted. 3. Payment and Delivery of Certificates. (a) At any Option Closing, Grantee will pay to Issuer in immediately available funds by wire transfer to a bank account designated in writing by Issuer an amount equal to the Purchase Price multiplied by the number of Option Shares to be purchased at such Option Closing. (b) At any Option Closing, simultaneously with the delivery of immediately available funds as provided in Section 3(a), Issuer will deliver to Grantee a certificate or certificates representing the Option Shares to be purchased at such Option Closing, which Option Shares will be free and clear of all liens, claims, charges and encumbrances of any kind whatsoever. If at the time of issuance of Option Shares pursuant to an exercise of the Option hereunder, Issuer shall not have redeemed the UNUM Rights, or shall have issued any similar securities, then each Option Share issued pursuant to such exercise will also represent a corresponding UNUM Right or new rights with terms substantially the same as and at least as favorable to Grantee as are provided under the UNUM Rights Agreement or any similar agreement then in effect. (c) Certificates for the Option Shares delivered at an Option Closing will have typed or printed thereon a restrictive legend which will read substantially as follows: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT, DATED AS OF NOVEMBER 22, 1998, A COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF UNUM CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICES." It is understood and agreed that (i) the reference to restrictions arising under the Securities Act in the above legend will be removed by delivery of substitute certificate(s) without such reference if such Option Shares have been registered pursuant to the Securities Act, such Option Shares have been sold in reliance on and in accordance with Rule 144 under the Securities Act or Grantee has delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel in form and substance reasonably satisfactory to Issuer and its counsel, to the effect that such legend is not required for purposes of the Securities Act and (ii) the reference to restrictions pursuant to this Agreement in the above legend will be removed by delivery of substitute certificate(s) without such reference if the Option Shares evidenced by certificate(s) containing such reference have been sold or transferred in compliance with the provisions of this Agreement under circumstances that do not require the retention of such reference. 4. Representations and Warranties of Issuer. Issuer hereby represents and warrants to Grantee as follows: Authorized Stock. Issuer has taken all necessary corporate and other action to authorize and reserve and, subject to the expiration or termination of any required waiting period under the HSR Act, to permit it to issue, and, at all times from the date hereof until the obligation to deliver Option Shares upon the exercise of the Option terminates, shall have reserved for issuance, upon exercise of the Option, shares of Issuer Common Stock necessary for Grantee to exercise the Option, and Issuer will take all necessary corporate action to authorize and reserve for issuance all additional shares of Issuer Common Stock or other securities which may be issued pursuant to Section 6 upon exercise of the Option. The shares of Issuer Common Stock to be issued upon due exercise of the Option, including all additional shares of Issuer Common Stock or other securities which may be issuable upon exercise of the Option or any other securities which may be issued pursuant to Section 6, upon issuance pursuant hereto, will be duly and validly issued, fully paid and nonassessable, and will be delivered free and clear of all liens, claims, charges and encumbrances of any kind or nature whatsoever, including without limitation any preemptive rights of any stockholder of Issuer. 5. Representations and Warranties of Grantee. Grantee hereby represents and warrants to Issuer that: Purchase Not for Distribution. Any Option Shares or other securities acquired by Grantee upon exercise of the Option will not be transferred or otherwise disposed of except in a transaction registered, or exempt from registration, under the Securities Act. 6. Adjustment upon Changes in Capitalization, Etc. (a) In the event of any change in the Issuer Common Stock by reason of a stock dividend, split-up, reverse stock split, merger, recapitalization, combination, exchange of shares, or similar transaction, the type and number of shares or securities subject to the Option, and the Purchase Price thereof, will be adjusted appropriately, and proper provision will be made in the agreements governing such transaction, so that Grantee will receive upon exercise of the Option the number and class of shares or other securities or property that Grantee would have received in respect of Issuer Common Stock if the Option had been exercised immediately prior to such event or the record date therefor, as applicable. Subject to Section 1, and without limiting the parties' relative rights and obligations under the Merger Agreement, if any additional shares of Issuer Common Stock are issued after the date of this Agreement (other than pursuant to an event described in the first sentence of this Section 6(a)), the number of shares of Issuer Common Stock subject to the Option will be adjusted so that, after such issuance, it equates 19.9% of the number of shares of Issuer Common Stock then issued and outstanding, without giving effect to any shares subject to or issued pursuant to the Option. (b) Without limiting the parties' relative rights and obligations under the Merger Agreement, in the event that Issuer enters into an agreement (i) to consolidate with or merge into any person, other than Grantee or one of its subsidiaries, and Issuer will not be the continuing or surviving corporation in such consolidation or merger, (ii) to permit any person, other than Grantee or one of its subsidiaries, to merge into Issuer and Issuer will be the continuing or surviving corporation, but in connection with such merger, the shares of Issuer Common Stock outstanding immediately prior to the consummation of such merger will be changed into or exchanged for stock or other securities of Issuer or any other person or cash or any other property, or the shares of Issuer Common Stock outstanding immediately prior to the consummation of such merger will, after such merger, represent less than 50% of the outstanding voting securities of the merged company, or (iii) to sell or otherwise transfer all or substantially all of its assets to any person, other than Grantee or one of its subsidiaries, then, and in each such case, the agreement governing such transaction will make proper provision so that the Option will, upon the consummation of any such transaction and upon the terms and conditions set forth herein, be converted into, or exchanged for, an option with identical terms appropriately adjusted to acquire the number and class of shares or other securities or property that Grantee would have received in respect of Issuer Common Stock if the Option had been exercised immediately prior to such consolidation, merger, sale, or transfer, or the record date therefor, as applicable and make any other necessary adjustments. (c) If, at any time during the period commencing on a Purchase Event and ending on the termination of the Option in accordance with Section 2, Grantee sends to Issuer an Exercise Notice indicating Grantee's election to exercise its right (the "Cash-Out Right") pursuant to this Section 6(c), then Issuer shall pay to Grantee, on the Option Closing Date, in exchange for the cancellation of the Option with respect to such number of Option Shares as Grantee specifies in the Exercise Notice, an amount in cash equal to such number of Option Shares multiplied by the difference between (i) the average closing price, for the 10 NYSE trading days commencing on the 12th NYSE trading day immediately preceding the Notice Date, per share of Issuer Common Stock as reported on the NYSE Composite Transaction Tape (or, if not listed on the NYSE, as reported on any other national securities exchange or national securities quotation system on which the Issuer Common Stock is listed or quoted, as reported in The Wall Street Journal (Northeast edition), or, if not reported thereby, any other authoritative source) (the "Closing Price") and (ii) the Purchase Price. Notwithstanding the termination of the Option, Grantee will be entitled to exercise its rights under this Section 6(c) if it has exercised such rights in accordance with the terms hereof prior to the termination of the Option. 7. Registration Rights. Issuer will, if requested by Grantee at any time and from time to time within three years of the exercise of the Option, as expeditiously as possible prepare and file up to three registration statements under the Securities Act if such registration is necessary in order to permit the sale or other disposition of any or all shares of securities that have been acquired by or are issuable to Grantee upon exercise of the Option in accordance with the intended method of sale or other disposition stated by Grantee, including a "shelf" registration statement under Rule 415 under the Securities Act or any successor provision, and Issuer will use its best efforts to qualify such shares or other securities under any applicable state securities laws. Grantee agrees to use reasonable efforts to cause, and to cause any underwriters of any sale or other disposition to cause, any sale or other disposition pursuant to such registration statement to be effected on a widely distributed basis so that upon consummation thereof no purchaser or transferee will own beneficially more than 4.9% of the then-outstanding voting power of Issuer. Issuer will use reasonable efforts to cause each such registration statement to become effective, to obtain all consents or waivers of other parties which are required therefor, and to keep such registration statement effective for such period not in excess of 180 calendar days from the day such registration statement first becomes effective as may be reasonably necessary to effect such sale or other disposition. The obligations of Issuer hereunder to file a registration statement and to maintain its effectiveness may be suspended for up to 60 calendar days in the aggregate if the Board of Directors of Issuer shall have determined that the filing of such registration statement or the maintenance of its effectiveness would require premature disclosure of material nonpublic information that would materially and adversely affect Issuer or otherwise interfere with or adversely affect any pending or proposed offering of securities of Issuer or any other material transaction involving Issuer. Any registration statement prepared and filed under this Section 7, and any sale covered thereby, will be at Issuer's expense except for underwriting discounts or commissions, brokers' fees and the fees and disbursements of Grantee's counsel related thereto. Grantee will provide all information reasonably requested by Issuer for inclusion in any registration statement to be filed hereunder. If, during the time periods referred to in the first sentence of this Section 7, Issuer effects a registration under the Securities Act of Issuer Common Stock for its own account or for any other stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor form), it will allow Grantee the right to participate in such registration, and such participation will not affect the obligation of Issuer to effect demand registration statements for Grantee under this Section 7; provided that, if the managing underwriters of such offering advise Issuer in writing that in their opinion the number of shares of Issuer Common Stock requested to be included in such registration exceeds the number which can be sold in such offering, Issuer will include the shares requested to be included therein by Grantee pro rata with the shares intended to be included therein by Issuer. In connection with any registration pursuant to this Section 7, Issuer and Grantee will provide each other and any underwriter of the offering with customary representations, warranties, covenants, indemnification, and contribution in connection with such registration. 8. Limitation on Profit. (a) Notwithstanding any other provision of this Agreement, in no event shall the Grantee's Total Profit (as defined below) plus any Termination Fee paid to Grantee pursuant to Section 5.09(c) of the Merger Agreement exceed in the aggregate $250 million and, if the total amount that otherwise would be received by Grantee would exceed such amount, the Grantee, at its sole election, shall either (i) reduce the number of shares of Issuer Common Stock subject to the Option, (ii) deliver to the Issuer for cancellation Option Shares previously purchased by Grantee against the refund of the Purchase Price therefore, (iii) pay cash to the Issuer or (iv) any combination thereof, so that Grantee's actually realized Total Profit, when aggregated with such Termination Fee so paid to Grantee, shall not exceed $250 million after taking into account the foregoing actions. (b) Notwithstanding any other provision of this Agreement, the Option may not be exercised for a number of Option Shares as would, as of the date of exercise, result in a Notional Total Profit (as defined below) which, together with any Termination Fee theretofore paid to Grantee, would exceed $250 million; provided, that nothing in this sentence shall restrict any exercise of the Option permitted hereby on any subsequent date. (c) As used herein, the term "Total Profit" shall mean the aggregate amount (before taxes) of the following: (i) the amount received by Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant to Section 6(c), (ii)(x) the net cash amounts or the fair market value of any property received by Grantee pursuant to the sale of Option Shares (or any other securities into which such Option Shares are converted or exchanged) to any unaffiliated party, but in no case less than the fair market value of the Option Shares, less (y) the Grantee's purchase price of such Option Shares, and (iii) the net cash amounts received by Grantee on the transfer (in accordance with Section 12(g)) of the Option (or any portion thereof) to any unaffiliated party. (d) As used herein, the term "Notional Total Profit" with respect to any number of Option Shares as to which Grantee may propose to exercise the Option shall be the Total Profit determined as of the date of such proposal assuming for such purpose that the Option were exercised on such date for such number of Option Shares and assuming that such Option Shares, together with all other Option Shares held by Grantee and its affiliates as of such date, were sold for cash at the closing market price on the NYSE for the Issuer Common Stock as of the close of business on the preceding trading day (less customary brokerage commissions.) 9. Transfers. The Option Shares may not be sold, assigned, transferred, or otherwise disposed of except (i) in an underwritten public offering as provided in Section 7 or (ii) to any purchaser or transferee who would not, to the knowledge of the Grantee after reasonable inquiry, immediately following such sale, assignment, transfer or disposal beneficially own more than 4.9% of the then-outstanding voting power of the Issuer; provided, however, that Grantee shall be permitted to sell any Option Shares if such sale is made pursuant to a tender or exchange offer that has been approved or recommended by a majority of the members of the Board of Directors of Issuer (which majority shall include a majority of directors who were directors as of the date hereof). 10. Listing. If Issuer Common Stock or any other securities to be acquired upon exercise of the Option are then listed on the NYSE (or any other national securities exchange or national securities quotation system), Issuer, upon the request of Grantee, will promptly file an application to list the shares of Issuer Common Stock or other securities to be acquired upon exercise of the Option on the NYSE (and any such other national securities exchange or national securities quotation system) and will use reasonable efforts to obtain approval of such listing as promptly as practicable. 11. Loss or Mutilation. Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like tenor and date. Any such new Agreement executed and delivered will constitute an additional contractual obligation on the part of Issuer, whether or not the Agreement so lost, stolen, destroyed, or mutilated shall at any time be enforceable by anyone. 12. Miscellaneous. (a) Expenses. Except as otherwise provided in the Merger Agreement, each of the parties hereto will bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including fees and expenses of its own financial consultants, investment bankers, accountants, and counsel. (b) Amendment. This Agreement may not be amended, except by an instrument in writing signed on behalf of each of the parties. (c) Extension; Waiver. Any agreement on the part of a party to waive any provision of this Agreement, or to extend the time for performance, will be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights. (d) Entire Agreement; No Third-Party Beneficiaries. This Agreement, the Provident Stock Option Agreement, the Merger Agreement (including the documents and instruments attached thereto as exhibits or schedules or delivered in connection therewith), the Stockholders Agreement, the Confidentiality Agreement and the Letter Agreement (i) constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement, and (ii) except as provided in Section 8.06 of the Merger Agreement, are not intended to confer upon any person other than the parties any rights or remedies. (e) Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the laws that might otherwise govern under applicable principles of conflict of laws thereof. (f) Notices. All notices, requests, claims, demands, and other communications under this Agreement must be in writing and will be deemed given if delivered personally, telecopied (which is confirmed), or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to Issuer to: UNUM Corporation 2211 Congress Street Portland, Maine 04122 Telecopy No.: (207) 770-4377 Attention: Kevin J. Tierney with a copy to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Attention: Robert A. Kindler Fax: (212) 474-3700; and If to Grantee to: Provident Companies, Inc. 1 Fountain Square Chattanooga, Tennessee 37402 Telecopy No.: (423) 755-5036 Attention: F. Dean Copeland with copies to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: H. Rodgin Cohen Fax: (212) 558-3588 (g) Assignment. Neither this Agreement, the Option nor any of the rights, interests, or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by Issuer or Grantee without the prior written consent of the other. Any assignment or delegation in violation of the preceding sentence will be void. Subject to the first and second sentences of this Section 12(g), this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (h) Further Assurances. In the event of any exercise of the Option by Grantee, Issuer and Grantee will execute and deliver all other documents and instruments and take all other actions that may be reasonably necessary in order to consummate the transactions provided for by such exercise. (i) Enforcement. The parties agree that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Federal court located in the State of Delaware or in Delaware state court, the foregoing being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto (i) consents to submit itself to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a Federal court sitting in the State of Delaware or a Delaware state court. 13. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall neverthe less remain in full force and effect. Upon such determi nation that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Amendment so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the day and year first written above. UNUM CORPORATION, by /s/ James F. Orr III -------------------------------- Name: James F. Orr III Title: Chairman and Chief Executive Officer PROVIDENT COMPANIES, INC., by /s/ J. Harold Chandler -------------------------------- Name: J. Harold Chandler Title: Chairman, President and Chief Executive Officer EX-10.3 5 STOCKHOLDERS AGREEMENT EXECUTION COPY STOCKHOLDERS AGREEMENT dated as of November 22, 1998 (this "Agreement"), among UNUM Corporation, a Delaware corporation ("UNUM"), and the individuals and other parties listed on Schedule A attached hereto (each, a "Stockholder" and, collectively, the "Stockholders"). WHEREAS UNUM and Provident Companies, Inc., a Delaware corporation (the "Company"), propose to enter into an Agreement and Plan of Merger dated as of the date hereof (as the same may be amended or supplemented, the "Merger Agreement"; capitalized terms used but not defined herein shall have the meanings set forth in the Merger Agreement), providing for the merger of UNUM with and into the Company, with the Company as the surviving corporation in the merger (the "Merger"), upon the terms and subject to the conditions set forth in the Merger Agreement; WHEREAS each Stockholder owns the number of shares of common stock, par value $1.00 per share, of the Company (the "Common Stock"), set forth opposite his, her or its name on Schedule A attached hereto (such shares of Common Stock, together with any other shares of capital stock of the Company acquired by such Stockholder after the date hereof and during the term of this Agreement (including through the exercise of any stock options, warrants or similar instruments), being collectively referred to herein as the "Subject Shares"); and WHEREAS as a condition to its willingness to enter into the Merger Agreement, UNUM has requested that each Stockholder enter into this Agreement. NOW, THEREFORE, to induce UNUM to enter into, and in consideration of its entering into, the Merger Agreement, and in consideration of the promises and the representations, warranties and agreements contained herein, the parties agree as follows: 1. Agreement to Vote Shares. (a) Subject to Section 1(b) hereof, each of the Stockholders agrees during the term of this Agreement to vote the Subject Shares as to which it has voting power or control, in person or by proxy, in favor of the Merger, the adoption and approval of the Merger Agreement and the approval of the transactions contemplated by the Merger Agreement at every meeting of the stockholders of the Company at which such matters are considered and at every adjournment thereof (each, a "Stockholder Meeting"). (b) Notwithstanding anything to the contrary contained herein, the obligations of the Stockholders pursuant to Section 1(a) hereof with respect to matters to be considered at any Stockholder Meeting are subject to the following conditions: (i) the Form S-4 (as defined in the Merger Agreement) to be filed with the Securities and Exchange Commission (the "SEC") by the Company under the Securities Act of 1933, as amended (the "Securities Act"), to register the shares of Common Stock to be issued by the Company in the Merger shall have become effective under the Securities Act and, as of the date of such Stockholder Meeting, shall not be the subject of any stop order or proceeding by the SEC seeking a stop order; (ii) neither the Board of Directors of the Company nor any committee thereof shall have withdrawn or modified, in a manner adverse to UNUM, its approval or recommendation of the Merger or the Merger Agreement pursuant to Section 4.02(b) of the Merger Agreement; and (iii) no amendment or modification of the Merger Agreement shall have been effected which reduces the Ratio. 2. No Other Grant of Proxy. The Stockholder will not, directly or indirectly, grant any proxies or powers of attorney with respect to the Subject Shares (other than in connection with matters proposed by the Company at an annual meeting of the Company) to any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity (each, a "person") other than UNUM or any person designated in writing by UNUM. 3. No Voting Trusts. Each of the Stockholders agrees that such Stockholder will not, nor will such Stockholder permit any entity under such Stockholder's control to, deposit any of such Stockholder's Subject Shares in a voting trust or subject any of its Subject Shares to any arrangement with respect to the voting of the Subject Shares inconsistent with this Agreement. 4. Affiliate Agreement. If, at the time the Merger Agreement is submitted for approval to the stock- holders of the Company, a Stockholder is an "affiliate" of the Company for purposes of qualifying the Merger for pooling-of-interests accounting treatment under Opinion 16 of the Accounting Principles Board and applicable SEC rules, regulations and interpretations thereunder, such Stockholder shall deliver to UNUM at least 30 days prior to the Closing Date a written agreement substantially in the form attached as Exhibit C-2 to the Merger Agreement. 5. Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of Delaware or in a Delaware state court, this being in addition to any other remedy to which they are entitled at law or in equity, and neither party will oppose the granting of such relief on the basis that the other party has an adequate remedy at law. 6. Term and Termination. Subject to Section 11(f), the term of this Agreement shall commence on the date hereof, and such term and this Agreement shall terminate upon the earliest to occur of (i) the Effective Time, (ii) the date on which the Merger Agreement is terminated in accordance with its terms and (iii) the date of any amendment or modification of the Merger Agreement, or other agreement entered into in connection therewith, or action taken (including any waiver of the terms of the Merger Agreement) by the Company or UNUM which (A) reduces the Ratio or otherwise alters the Ratio in a manner adverse to the Stockholders or holders of Company Common Stock generally, (B) grants to the stockholders of UNUM any securities or other rights or requires UNUM or the Company to take any action which would have the effect of altering the relative interests of the stockholders of UNUM and the stockholders of the Company implied by the Ratio, (C) alters the provisions of Section 5.16 of the Merger Agreement, (D) extends the date set forth in Section 7.01(b)(i) of the Merger Agreement or (E) waives, amends or modifies the provisions of Section 6.03(c) of the Merger Agreement. Upon any such termination, no party shall have any further obligations or liabilities hereunder. 7. Certain Events. (a) Except as provided for by Section 7(b) hereof, each Stockholder agrees that this Agreement and the obligations hereunder shall attach to such Stockholder's Subject Shares and shall be binding upon any person to which legal or beneficial ownership of such Subject Shares shall pass, whether by operation of law or otherwise, including such Stockholder's heirs, guardians, administrators or successors. In the event of any stock split, stock dividend, merger, reorganization, recapitaliza- tion or other change in the capital structure of the Company affecting the Common Stock, or the acquisition of additional shares of Common Stock or other voting securities of the Company by any Stockholder, the number of Subject Shares listed in Schedule A beside the name of such Stockholder shall be adjusted appropriately and this Agreement and the obligations hereunder shall attach to any additional shares of Common Stock or other voting securities of the Company issued to or acquired by such Stockholder. (b) Notwithstanding the foregoing, Section 7(a) shall not apply, and the obligations of Section 1(a) shall not continue, with respect to Subject Shares that are the subject of charitable contributions or bona fide gifts (as described in Section 2522 of the Internal Revenue Code of 1986, as amended) made by (i) The Maclellan Foundation, Inc. in an amount not to exceed 350,000, (ii) The R.J. Maclellan Trust For The Maclellan Foundation, Inc. in an amount not to exceed 250,000 and (iii) Hugh O. Maclellan, Jr., Kathrina H. Maclellan and Charlotte M. Heffner, in amounts for each such person not to exceed .05% of the total outstanding number of shares of Common Stock as of the date hereof (such Subject Shares are collectively referred to herein as the "Excluded Charitable Shares"). (c) Each Stockholder agrees that such Stockholder will tender to the Company, prior to any transfer, offer to transfer or agreement to transfer any Subject Shares (other than Excluded Charitable Shares), by sale, gift or otherwise, any and all certificates representing such Subject Shares in order that the Company may inscribe upon such certificates the legend in accordance with Section 5.18 of the Merger Agreement and the Company shall thereafter cause such certificates to be returned to such Stockholder within three business days of the Company's receipt thereof in accordance with such Section 5.18. 8. Stockholder Capacity. No person executing this Agreement who is or becomes during the term hereof a director or officer of the Company (or who has been designated to the Board of Directors of the Company by a Stockholder) makes (or shall be deemed to have made) any agreement or understanding herein in his or her capacity as such director or officer. Without limiting the generality of the foregoing, each Stockholder signs solely in its, his or her capacity as the record and/or beneficial owner, as applicable, of such Stockholder's Subject Shares and nothing herein shall limit or affect any actions taken by a Stock holder (or a designee of a Stockholder) in his or her capacity as an officer or director of the Company in exercising its rights under the Merger Agreement. 9. Entire Agreement; No Third Party Beneficiaries; Amendment; Waiver. This Agreement (including the documents and instruments referred to herein) (i) constitutes the entire agreement and supersedes all prior agreements and understandings, written or oral, among the parties with respect to the subject matter hereof and (ii) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. This Agreement may not be amended, supplemented or modified, and no provisions hereof may be modified or waived, except by an instrument in writing signed by each of the parties hereto. No waiver of any provisions hereof by any party shall be deemed a waiver of any other provisions hereof by any such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party. 10. Notices. All notices, consents, requests, instructions, approvals and other communications provided for herein shall be in writing and shall be deemed to have been duly given if mailed, by first class or registered mail, three (3) business days after deposit in the United States Mail, or if telexed or telecopied, sent by telegram, or delivered by hand or reputable overnight courier, when confirmation is received, in each case as follows: If to the Stockholders, to the addresses listed on Schedule A hereto. With a copy to: King & Spalding 1185 Avenue of the Americas New York, New York 10036-4003 Attention: E. William Bates, II, Esq. Telephone: (212) 556-2240 Facsimile: (212) 556-2222 And a copy to: Carter Ledyard & Milburn 2 Wall Street New York, New York 10003 Attention: Richard Covey, Esq. Telephone: (212) 732-3200 Facsimile: (212) 944-9738 If to UNUM, in accordance with Section 8.02 of the Merger Agreement; or to such other persons or addresses as may be designated in writing by the party to receive such notice. Nothing in this Section 10 shall be deemed to constitute consent to the manner and address for service of process in connection with any legal proceeding (including litigation arising out of or in connection with this Agreement), which service shall be effected as required by applicable law. 11. Miscellaneous. -------------- (a) When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpreta- tion of this Agreement. Wherever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." (b) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware regardless of the laws that might otherwise govern under applicable principles of conflicts of laws. (c) If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner and to the end that the transactions contemplated hereby are fulfilled to the extent possible. (d) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more of the counterparts have been signed by each of the parties and delivered to the other party, it being understood that each party need not sign the same counterpart. (e) Except as provided for by Section 7 hereof, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Stockholder, on the one hand, without the prior written consent of UNUM, nor by UNUM, on the other hand, without the prior written consent of the Stockholders, except that UNUM may assign, in its sole discretion, any or all of its rights, interests and obligations hereunder to any direct or indirect wholly owned subsidiary of UNUM; provided that notwithstanding such assignment UNUM shall remain liable for performance of its obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. (f) The obligations of the Stockholders set forth in this Agreement shall not be effective or binding upon the Stockholders until after such time as the Merger Agreement is executed and delivered by UNUM and the Company. Nothing contained in this Agreement shall be construed as containing any liability on the part of the Stockholders under the Merger Agreement. IN WITNESS WHEREOF, UNUM has caused this Agreement to be signed by its officer thereunto duly authorized and each Stockholder has signed this Agreement, all as of the date first written above. UNUM CORPORATION By: /s/ James F. Orr III --------------------------- James F. Orr III STOCKHOLDERS: /s/ Hugh O. Maclellan, Jr. -------------------------------- Hugh O. Maclellan, Jr. /s/ Kathrina H. Maclellan -------------------------------- Kathrina H. Maclellan /s/ Charlotte M. Heffner -------------------------------- Charlotte M. Heffner THE MACLELLAN FOUNDATION, INC. By: /s/ Hugh O. Maclellan, Jr. --------------------------- Hugh O. Maclellan, Jr. President THE R.J. MACLELLAN TRUST FOR THE MACLELLAN FOUNDATION, INC. By: /s/ Hugh O. Maclellan, Jr. --------------------------- Hugh O. Maclellan, Jr., Trustee By: /s/ Kathrina H. Maclellan --------------------------- Kathrina H. Maclellan, Trustee By: /s/ Dudley Porter, Jr. --------------------------- Dudley Porter, Jr., Trustee THE HELEN M. TIPTON FOUNDATION, INC. By: /s/ Hugh O. Maclellan, Jr. --------------------------- Hugh O. Maclellan, Jr. President THE R.J. MACLELLAN TRUST FOR THE R.L. MACLELLAN FAMILY By: /s/ Kathrina H. Maclellan --------------------------- Kathrina H. Maclellan, Trustee By: /s/ Dudley Porter, Jr. --------------------------- Dudley Porter, Jr., Trustee THE CORA L. MACLELLAN TRUST FOR THE R.L. MACLELLAN FAMILY By: /s/ Kathrina H. Maclellan --------------------------- Kathrina H. Maclellan, Trustee By: /s/ Dudley Porter, Jr. --------------------------- Dudley Porter, Jr., Trustee THE R.J. MACLELLAN TRUST FOR THE HUGH O. MACLELLAN, SR. FAMILY By: /s/ Hugh O. Maclellan, Jr. --------------------------- Hugh O. Maclellan, Jr., Trustee THE CORA L. MACLELLAN TRUST FOR THE HUGH O. MACLELLAN, SR. FAMILY By: /s/ Hugh O. Maclellan, Jr. --------------------------- Hugh O. Maclellan, Jr., Trustee TRUST U/A HUGH O. MACLELLAN, SR. DATED 11/19/66 FOR THE BENEFIT OF CATHERINE H. MACLELLAN By: /s/ Hugh O. Maclellan, Jr. --------------------------- Hugh O. Maclellan, Jr., Trustee TRUST U/A HUGH O. MACLELLAN, SR. DATED 7/8/68 FOR THE BENEFIT OF DANIEL O. MACLELLAN By: /s/ Hugh O. Maclellan, Jr. --------------------------- Hugh O. Maclellan, Jr., Trustee TRUST U/A HUGH O. MACLELLAN, SR. DATED 3/12/64 FOR THE BENEFIT OF CHRISTOPHER H. MACLELLAN By: /s/ Hugh O. Maclellan, Jr. --------------------------- Hugh O. Maclellan, Jr., Trustee SCHEDULE A Number of Percentage of Outstanding Voting Power of Stockholder Shares Owned the Company1 Hugh O. Maclellan, Jr. 1,544,054 1.14% Kathrina H. Maclellan 2,756,283 2.04% Charlotte M. Heffner 915,390 0.68% The Maclellan Foundation, Inc. 15,484,693 11.44% The R.J. Maclellan Trust For 6,583,160 4.86% The Maclellan Foundation, Inc. The Helen M. Tipton 3,327,454 2.46% Foundation, Inc. The R.J. Maclellan Trust For 1,076,690 0.80% The R.L. Maclellan Family The Cora L. Maclellan Trust 1,071,640 0.80% For The R.L. Maclellan Family The R.J. Maclellan Trust For The 1,045,230 0.77% Hugh O. Maclellan, Sr. Family The Cora L. Maclellan Trust 1,037,390 0.77% For The Hugh O. Maclellan, Sr. Family Trust U/A Hugh O. Maclellan, Sr. 102,182 0.08% Dated 11/19/66 For The Benefit Of Catherine H. Maclellan Trust U/A Hugh O. Maclellan, Sr. 102,120 0.08% Dated 7/6/68 For The Benefit Of Daniel O. Maclellan Trust U/A Hugh O. Maclellan, Sr. 94,870 0.07% Dated 3/12/64 For The Benefit Of Christopher H. Maclellan - -------- 1 Based on 135,406,403 total shares outstanding as of November 17, 1998. EX-99 6 PRESS RELEASE UNUM(R) PROVIDENT Contacts: For UNUM For Provident Media: George Sard/David Reno Media & Analysts: Catharine Hartnett Sard Verbinnen & Co. Thomas A. H. White (207) 770-4356 (212) 687-8080 (423) 755-8996 Analysts: Kent W. Mohnkern (207) 770-4392 UNUM AND PROVIDENT ANNOUNCE STRATEGIC MERGER CREATING GLOBAL LEADER IN DISABILITY INSURANCE PORTLAND, ME and CHATTANOOGA, TN, November 23, 1998 -- UNUM Corporation (NYSE:UNM) and Provident Companies, Inc. (NYSE:PVT) today jointly announced a strategic merger that will create UNUMProvident, the global leader in disability insurance and complementary special risk products and services. Under the terms of a definitive merger agreement approved by the Boards of both companies, Provident shareholders will receive 0.73 shares of UNUMProvident in exchange for each Provident common share and UNUM shareholders will receive one share of UNUMProvident in exchange for each UNUM common share. The transaction will be accounted for as a pooling of interests and is expected to be tax-free to shareholders of both companies. Combined, UNUM and Provident have pro forma revenues of more than $8.4 billion for the twelve months ended September 30, 1998, a current market capitalization of over $11 billion, 1997 earned premiums of $6 billion and a significant presence in group and individual disability insurance, group life insurance and voluntary benefits. Total combined assets exceed $38 billion as of September 30, 1998. The companies expect the transaction to be accretive to earnings per share in 1999. UNUMProvident anticipates achieving annual cost savings of approximately $120-130 million. James F. Orr III, 55, UNUM's chairman and chief executive officer, said, "This unique strategic merger is the perfect fit of highly complementary, healthy and growing businesses. The combination gives us enhanced financial strength, expanded national and international distribution and comprehensive product offerings to provide superior value and integrated solutions to a broad range of customers. UNUM's leadership in group disability and voluntary products combined with Provident's leadership in 2 individual products creates the clear leader in the still highly under-penetrated disability market. It is our intention to take the absolute best of both companies -- cultures and employees, products and systems -- and build an organization that is capable of achieving far more together than either of us could have on our own." J. Harold Chandler, 49, Provident's chairman, president and chief executive officer, said, "The merger with UNUM is the next logical step for Provident and I couldn't be more proud of the result of our shareholders and our many dedicated employees. Very importantly, our customers will benefit as we accelerate the implementation of our plan to provide the marketplace with more comprehensive disability insurance solutions featuring industry-leading return-to-work programs. Together, UNUMProvident will have outstanding new growth opportunities. We have already made substantial progress in defining the new business model for the merged company and we intend to focus on realizing the full potential of this unique combination for our shareholders, customers and employees." Upon the merger of the companies, Orr will serve as chairman and chief executive officer of UNUMProvident and Chandler will serve as president and chief operating officer. On July 1, 2001, Chandler will succeed Orr as chief executive officer of UNUMProvident, and Orr will remain UNUMProvident's chairman. The UNUMProvident Board of Directors will be made up of eight current members of the UNUM Board and seven current members of the Provident Board. The only inside directors will be Orr and Chandler. The Executive Committee of the Board will be comprised of Orr, Chandler, two current UNUM directors and two current Provident directors. Four other executives will comprise the senior UNUMProvident management team along with Orr and Chandler. Thomas R. Watjen, currently vice chairman and chief financial officer of Provident, will serve as executive vice president of finance, with responsibility for financial operations, investments and portfolio strategy, and corporate development. Elaine D. Rosen, currently president, UNUM Life Insurance Company of America, the largest subsidiary of UNUM Corp., will serve as executive vice president in charge of North American products, underwriting, claims management, and customer service. Robert W. Crispin, currently executive vice president of UNUM, will serve as executive vice president in charge of North American distribution, Canadian operations, and Colonial Life and Accident Insurance Company, a UNUM 3 subsidiary. F. Dean Copeland, currently executive vice president and general counsel of Provident, will serve as executive vice president of legal and administrative affairs. A transition and integration team responsible for overseeing the combination of the two companies will be comprised of these six UNUMProvident senior executives. The team will be chaired by Orr and coordinated by Watjen. In addition, UNUM's chief financial officer, Robert E. Broatch, will serve as chief financial officer of the combined company, reporting to Watjen. Significant corporate operations of UNUMProvident will remain in both Portland, Maine and Chattanooga, Tennessee. UNUMProvident plans to maintain substantial operations in Columbia, South Carolina; Worcester, Massachusetts; Toronto/Burlington, Canada; and in other North American cities and international locations. The transaction is expected to be completed by mid-1999 and is subject to clearance or approval by certain federal and state regulators, approval by shareholders of both companies, and customary closing conditions. Members of the Maclellan family representing approximately 26% of Provident's common stock have agreed to vote in favor of the merger. Zurich Centre Group and its affiliates, who hold approximately 14% of Provident's common stock, have also advised the companies that they intend to vote in favor of the merger. As a result of the merger, approximately 58% of UNUMProvident will be owned by current UNUM shareholders and 42% of UNUMProvident by current Provident shareholders. Effective immediately, both UNUM and Provident have rescinded their existing share repurchase programs. The merger agreement provides for the payment of termination fees under certain circumstances and UNUM and Provident have also entered into customary "cross" stock option agreements. Based in Chattanooga, Provident, through its subsidiaries, is a leading provider of disability insurance and related products for individual and corporate customers. Provident has significant operations throughout the U.S. and Canada. Based in Portland, UNUM, through its businesses, is the world leader in group disability insurance and ranks among 4 the world's leading special risk insurers. UNUM's companies are leading providers of disability insurance in North America and the United Kingdom, as well as providers of other employee benefits, including group life insurance, long term care insurance and payroll-deducted voluntary benefits offered to employees at their worksites. UNUM has operations in the United States, Canada, the U.K., the Pacific Rim, Europe, Latin America and Bermuda. # # # -----END PRIVACY-ENHANCED MESSAGE-----